Financial Markets Honor Sustainable Development

Increasingly, investors are diversifying their portfolios by investing in companies that set industry-wide best practices with regard to sustainability. Reasons are:

• Low risk. Companies applying the principles of sustainable development systematically assess future economic, social, and ecological risks. Strategies are developed early to minimize such risks.

• Shareholder value. Business in accordance with sustainable development is attractive to investors because it aims to increase long-term shareholder value.

• Success. Sustainability is considered a catalyst for enlightened and disciplined management, and, thus, a crucial success factor.

Which companies operate according to the principles of sustainability? The answer can be found in special share indices - the so-called sustainability indices. In 2003, BASF was again included in the Dow Jones Sustainability Index for the third year in succession. This index includes only 10 percent of chemical companies represented in the Dow Jones Global Index. BASF shares are also listed in the FTSE4Good index and are included in the portfolios of various sustainability funds such as Storebrand's Principle fund.

To be included and to remain listed in these sustainability indices, BASF has to undergo an annual detailed assessment by a rating agency. The agency's analysts scrutinize to what extent we have integrated sustainability principles into our business processes and how we implement them using appropriate tools. This critical external investigation is an important supplement to our internal control mechanisms. Inclusion in sustainability indices is important for BASF because it shows our progress towards a sustainable company.

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